AlphaCat Managers, the insurance-linked securities (ILS) fund manager subsidiary of AIG, has completed an ILS transaction with Ledger Capital Markets, the MGA entity of insurtech and ILS startup Ledger Investing.
The deal involves the direct securitisation of a non-standard passenger auto insurance portfolio. It brings a new class of business to ILS investors and includes a private placement of two tranches of notes amounting to $10 million, including a $6.67m senior note.
The remaining $3.33m junior note will pay ILS fund investors retained earnings after payments made to support the senior tranche. The junior tranche acts as a profit and loss share with Ledger.
"We’re pleased to lead the ILS market expansion beyond property catastrophe and reinsurance sourced risks," said Lixin Zeng, CEO of AlphaCat. "This facility’s novel structure enables MGAs to upsize more nimbly and AlphaCat to deploy our clients’ capital more efficiently."
This deal is the first for Ledger acting as the structurer and bookrunner for a bilateral ILS transaction between an MGA and ILS fund
Samir Shah, CEO of Ledger Investing, commented: "This innovative transaction creates new ILS market opportunities in securitizing broader classes of insurance risk. We look forward to working with more MGAs and insurers.”
AlphaCat, AIG, Ledger, ILS, Bermuda